ESLC Profile: General James Conway

This article is part of a series profiling members of SAFE’s Energy Security Leadership Council (ESLC),a group of business and former military leaders committed to reducing the United States’ dependence on oil.

General James Conway served in the Marine Infantry for more than 40 years, and was confirmed as the 34th Commandant for the U.S. Marine Corps in 2006. Before he became Commandant, General Conway was assigned to the Joint Chiefs of Staff, where he supervised the war efforts in Iraq and Afghanistan. As a member of the Joint Chiefs of Staff, General Conway served as a military adviser to the Secretary of Defense, the National Security Council, and the President.

General Conway, who was born in Arkansas and attended college in Missouri, joined SAFE’s ELSC at the recommendation of retired General P.X. Kelley, the co-founder of the ESLC along with FedEx CEO Fred Smith. General Conway’s background as a Marine motivated him to engage in the cause of oil dependence because of its negative effects on national security. He was reminded of President Eisenhower’s argument that increased reliance on crude oil imports can spur a national security crisis.

“At the time I joined the ESLC, we were importing 60 percent of our petroleum requirements, and we were more than 90 percent reliant on petroleum in transportation,” said General Conway. “Those statistics are compelling.”

“American ingenuity and American businesses are why our import dependence has fallen.”

General Conway is encouraged that the United States has been making significant progress on energy security matters, largely due to rapid technological innovations. “American ingenuity and American businesses are why our import dependence has fallen,” General Conway said.

He holds optimism that the domestic oil and gas industry will continue to increase production and weaken OPEC’s influence in the global oil markets.

At the same time, new technologies in the transportation sector are also an important part of the equation that makes General Conway hopeful for the future of U.S. energy security. “When you add autonomous vehicles to the picture, we can make our goal of reducing our transportation oil requirements by 50 percent by 2040,” he said.

“When you add autonomous vehicles to the picture, we can make our goal of reducing our transportation oil requirements by 50 percent by 2040.”

Even though the outlook has improved for U.S. energy security with higher domestic production and the promise of greater efficiency and fuel diversity through autonomy, General Conway worries that the country’s progress could easily be “disrupted” by international conflicts and turmoil in oil-producing nations. Global oil markets are vulnerable to geopolitical instability and unplanned supply outages, and U.S. consumers are still not insulated from supply disruptions and price spikes despite the rapid rise in shale oil production.

“I see a positive horizon in petroleum issues, but global events could change all of that.”

There is currently a long list of countries whose barrels are at risk. They include but are not limited to Iraq, Venezuela, Libya, Nigeria, and Iran. On top of worries about disruptions, General Conway pointed out, major producers such as Saudi Arabia and Russia are using their clout in the international market to restrict supply to increase prices. And besides uncertainties surrounding oil-producing countries, increased tensions in places such as Turkey, Syria, and North Korea could also rattle global markets and cause prices to spike.

“The global economy is growing, and oil will likely remain cheap,” General Conway said, “I see a positive horizon in petroleum issues, but global events could change all of that.”

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The Fuse is an energy news and analysis site supported by Securing America’s Future Energy. The views expressed here are those of individual contributors and do not necessarily represent the views of the organization.

Issues in Focus

Safety Standards for Crude-By-Rail Shipments

A series of accidents in North America in recent years have raised concerns regarding rail shipments of crude oil. Fatal accidents in Lynchburg, Virginia, Lac-Megantic, Quebec, Fayette County, West Virginia, and (most recently) Culbertson, Montana have prompted public outcry and regulatory scrutiny.

2014 saw an all-time record of 144 oil train incidents in the U.S.—up from just one in 2009—causing a total of more than $7 million in damage.

The spate of crude-by-rail accidents has emerged from the confluence of three factors. First is the massive increase in oil movements by rail, which has increased more than three-fold since 2010. Second is the inadequate safety features of DOT-111 cars, particularly those constructed prior to 2011, which account for roughly 70 percent of tank cars on U.S. railroads. Third is the high volatility of oil produced from the Bakken and other shale formations, which makes this crude more prone towards combustion.

Of these three, rail car safety standards is the factor over which regulators can exert the most control. After months of regulatory review, on May 1, 2015, the White House and the Department of Transportation unveiled the new safety standards. The announcement also coincided with new tank car standards in Canada—a critical move, since many crude by rail shipments cross the U.S.-Canadian border. In the words DOT, the new rule:

Since the rule was announced, Republicans in Congress sought to roll back the provision calling for an advanced breaking system, following concerns from the rail industry that such an upgrade would be unnecessary and could cost billions of dollars. The advanced braking systems are required to be in place by 2021.

Democrats in Congress have argued that the new rules are insufficient to mitigate the danger. Senator Maria Cantwell (D-WA) and Senator Tammy Baldwin (D-WI) both issued statements arguing that the rules were insufficient and the timelines for safety improvements were too long.

The current industry standard car, the CPC-1232, came into usage in October 2011. These cars have half inch thick shells (marginally thicker than the DOT-111 7/16 inch shells) and advanced valves that are more resilient in the event of an accident. However, these newer cars were involved in the derailments and explosions in Virginia and West Virginia within the past year, raising questions about the validity of replacing only the DOT-111s manufactured before 2011.

Before the rule was finalized, early reports indicated that the rule submitted to the White House by the Department of Transportation has proposed a two-stage phase-out of the current fleet of railcars, focusing first on the pre-2011 cars, then the current standard CPC-1232 cars. In the final rule, DOT mandated a more aggressive timeline for retrofitting the CPC-1232 cars, imposing a deadline of April 1, 2020 for non-jacketed cars.

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DataSpotlight

The recent oil production boom in the United States, while astounding, has created a misleading narrative that the United States is no longer dependent on oil imports. Reports of surging domestic production, calls for relaxation of the crude oil export ban, labels of “Saudi America,” and the recent collapse in oil prices have created a perception that the United States has more oil than it knows what to do with.

This view is misguided. While some forecasts project that the United States could become a self-sufficient oil producer within the next decade, this remains a distant prospect. According to the April 2015 Short Term Energy Outlook, total U.S. crude oil production averaged an estimated 9.3 million barrels per day in March, while total oil demand in the country is over 19 million barrels per day.

This graphic helps illustrate the regional variations in crude oil supply and demand. North America, Europe, and Asia all run significant production deficits, with the Middle East, Africa, Latin America, and Former Soviet Union are global engines of crude oil supply.